After a heated battle, U.S. tomato growers have won a major victory in their effort to overturn a settlement agreement that resulted from an anti-dumping action brought in 1996 against Mexican producers.
On Sept. 27, the U.S. Department of Commerce issued a preliminary decision in a so-called change-of-circumstance review that if it stands will allow U.S. producers to terminate the settlement agreement and withdraw the old anti-dumping action.
"The decision is welcome news to domestic growers and the workers who have suffered under an outdated and failed agreement governing trade in fresh tomatoes with Mexico," said Reginald Brown, executive vice president of the Maitland-based Florida Tomato Exchange, which helped spearhead the national campaign to restore free and fair trade with Mexico and stop the severe damage done to domestic producers, including Florida growers.
The next step in the process is for the U.S. Department of Commerce to render a final decision in the change-of-circumstance review within 30-40 days, Brown said. In the meantime, however, Mexico will fight the proceeding.
"You can rest assured the Mexican government and growers will use any measure, including intimidation of other commodities with counter-threats of trade actions that are totally inappropriate and illegal under WTO and NAFTA rules," Brown said. "It's unfortunate, but the Mexicans are trying to bully our domestic industry out of their rights under U.S. law."
Tony DiMare, vice president of Homestead-based DiMare Company, a major producer and packer of Florida tomatoes who played a key role in the current action, said that if the preliminary Commerce decision becomes final, domestic producers will consider bringing a new dumping action against Mexico as a survival tactic.
"The Mexicans have said consistently they have never violated the [old settlement] agreement," DiMare said. "Well, if that is truly the case, and the old agreement goes away and the domestic industry chooses to bring forward a new dumping case, if they haven't violated the agreement then they have nothing to worry about. We'll end up spending a lot of money, but they will still be victorious."
With the existing settlement agreement in place, U.S. producers can take no such legal action to protect themselves. "That's why the Mexicans are fighting so hard to keep it in place," DiMare said.
The only real, lasting solution to the problem of an oversupply of Mexican crops such as tomatoes at artificially low prices is for Commerce to step up and do its job in monitoring Mexican production and helping to enforce existing trade laws, DiMare said.
But his confidence that will ever happen, he said, is low.
"The reason I say that is we've lived with a suspension agreement for 16 years that has not been and cannot be effectively monitored and managed," he said. "And that's not just because of Commerce. Sometimes you have agreements that just don't work."
DiMare stressed that U.S. growers are not trying to restrict Mexican exports. They're only looking to remove an existing minimum reference price under the current settlement agreement that has undermined U.S. prices and hurt domestic growers while guaranteeing Mexican producers a profit.
As a result, DiMare said, the domestic industry has been devastated. "We're losing individual growers," he said. "We're losing packing houses. And Mexico continues to increase its production. So something is wrong with the picture and that needs to be corrected. And it's not just a Florida issue. It's a national issue."
Brown is reasonably confident that the same facts that led to the preliminary favorable ruling by Commerce will carry the day for a final decision. "Their analysis was thorough and complete," he said. "And for that, we want to thank Deputy Secretary Francisco Sanchez for his diligence in moving the process forward."
If the 1996 settlement agreement is terminated and the original anti-dumping action withdrawn, "that will then provide the Mexican industry a free and open border for free and fair trade," Brown said. "And free and fair trade is all the domestic industry is asking for."
It remains to be seen whether U.S. producers will initiate a new dumping action against Mexico, DiMare said, adding that the process is expensive and time-consuming. And it likely would not solve the problem, he said.
"The only way the market will ever return to normal, or to fair trade, is if there are adjustments in the levels of production," he said. "That's because at the end of the day, it's really about supply and demand. No matter what the product is, if there's too much supply, you're going to suffer. And that's where U.S. tomato growers and other producers are at the moment."